Home Sense

In the first place: Living large in a starter house

by
Erie Insurance
on
April 19, 2018

Getting into the housing game for the first time? The kind of house you’re looking at might be what your real estate agent calls a starter house.

What that starter house looks like will depend on your income, but in general, it’s the house you can afford as a first-time homebuyer, which typically means a smaller house, something on the scale of 1,000 to 1,800 square feet of living space.

Many people see a starter home as the beginning of their home-owning journey, with plans to sell eventually and get something bigger.

In spite of its name, a starter house can also turn into a forever home. (Just take a walk down an established neighborhood street, and you’ll probably find plenty of middle-aged and older families who have stayed for decades in their starter home.)

Whatever your plan is, here’s a big look at the small-sized house, starting with some fun facts about the American dream. We’ll also talk about considerations you should have in mind before you choose to buy that starter home, the upsides of smaller-house living, and, finally, some tips and ideas to make the most of a smaller space.

A brief history of the starter home

Owning a home of one’s own on a bit of land has always been a big investment for the average working person. At the same time, it’s always been seen as a critical part of “making it” in America. A look back at U.S. history reveals some innovative ideas to bring that dream within reach.

The Homestead Act: In 1862, the U.S. government let citizens claim and settle public domain land for free. Once you claimed that 160-acre parcel, you had five years to build a house, live in it and start farming. Fun fact: When the act was repealed in 1976, homesteading continued in Alaska to some extent until 1986, according to the National Park Service.

DIY kit: If you live in an area with older homes, you can probably still see some in the neighborhood that were not built by a team of contractors, but by a single homeowner. House kits you could order by mail were widely available during the early half of the 20th century. (Sears is the most familiar example of a house kit retailer.) All you had to do was pick the one you liked, order it, and before long, the lumber, instructions and everything you needed were shipped in.

Post-war boom: After World War II, when the soldiers came home, got married and started families, cities were bursting at the seams, trying to accommodate the big influx. Developers started building and marketing small houses in the outskirts on smaller tracts of land. Because these homes could be had for 2.5 times the average annual income of a working family, they were relatively affordable.

Is a starter home smart for you?

If you’re in your 20s or 30s and looking to buy for the very first time, a smaller starter home may look like an attractive option. At the same time, you may be in a stage where big changes lie ahead in the not-to-distant future. Five years from now, you could be married, you could become a parent, you could move away for a new opportunity — or all of the above!

As a rule, the longer you can keep the house, the better the resell advantage, which is why Realtors and lenders often recommend waiting at least five years. There are taxes, closing costs, commissions and other costs that go into selling a house, and you'll want that cushion from equity and appreciated values.

If you’re on the fence, here are a few things to consider.

Locking it in: Historically, property values have gone up steadily, and those record-low interest rates may not be around forever. Buying now stabilizes your housing costs.

Is there room to grow? If you expect more family members, can your smaller digs accommodate them, or will you have to move? If the place has a one-car garage, can you deal with parking outside? There’s a huge difference between downsizing comfortably (like giving up a spare bedroom) and cramped conditions.

Career considerations: It’s not just marriage and family. Jobs influence where you live. Be sure and weigh your career prospects. If something were to happen to your current employer, could you find a similar job nearby, or are you likely to move?

Buy now, rent it out later: Perhaps you’re hatching a plan to keep the first place as investment property when you’re ready to move. Be aware of the housing market in your area, and build enough spare cash so you can comfortably cover repairs, vacancies and other expenses that come up for landlords.

What’s the small-house advantage?

Over the past 40 years, our appetite for big houses has grown tremendously. Back in 1973, 1,660 square feet was the average size of a new house, verses 2,687 square feet in 2015, according to the U.S. Census.

Lately, a movement has sprung up to rethink that notion. Some are going extreme and building tiny houses, while others are simply seeing the upside of putting down roots in a more traditional-sized house with fewer rooms. Here are a few considerations to think about.

Easy living: With fewer square feet to pick up and vacuum, housecleaning should get done quickly, leaving more time in your schedule for free time and fun. (Especially if everyone pitches in.) Another thing: With everything close together, hot water comes out of the tap in mere seconds!

The costs of … well, everything: From rooftop to basement, fewer square feet means lower housing costs. Smaller homes cost less to heat and cool, they cost less to insure, and they have lower property taxes. Don’t forget, things like the roof and siding will need replacing eventually and fewer square feet keeps the costs down. Over the years, these savings can add up to a nice sum of money.

Gives your budget a cushion: Some people stay put in their starter home because it lets them lock in on one constant payment for the next 30 years. As income rises, this can be an advantage. It can let you pay off your mortgage early or give your finances a much-needed break when you need it most, such as during a job loss.

Closer connections: It must be said: Family life in a smaller house gets noisy. Some parents see long-term benefits. Growing up in closer quarters, sharing bathrooms can teach kids life lessons on how their actions (and sounds) affect others. That can shape them into savvier, more considerate adults. That’s the hope, anyway.

Tips to make the most of limited spaceMaximize the comfort and style of your smaller house by being extra thoughtful about making the space work as efficiently as possible.

Look for functional pieces: When shopping for furniture, pieces that pull double duty are optimal. For example, set a tray on top of an ottoman or cluster it with the chairs and sofa to create more seating. Sometimes it’s a matter of clever furniture placement. In a small bedroom, a writing desk doubles as a nightstand when positioned next to the head of the bed.

Play with color: In a small room, many designers start with a plain base — neutral-colored walls with light-colored curtains, shades and pieces of furniture. To give the room a bigger feel, add bold statement pieces that do all the talking. A patterned rug in bold colors, for example, an extra large chair, or even a brightly colored lamp or throw pillows add pops of color and liveliness.

Use the ceilings and walls: To save space, keep things up and off floors and surfaces as much as possible. Instead, see if there’s a clever solution you can attach to a wall or even the ceiling to conserve floor and shelf space.

Floating shelves and wall-mounted cubes can be attractive and space-saving ways to display books and supplies.

Ditch the bulky entertainment center and hang your flat screen-TV on the wall.

In the bathroom, wall-mounted dispensers are a sleek solution for the cluster of shampoo, conditioner and shower gel bottles crowding the shelves and ledges.

Clutter control: Taming crowded shelves and crammed closets means staying on top of what comes in and what goes out. Create a one-to-one rule. That is, for everything new that enters, something old must go. For instance, when you replace the area rug in the living room, resist the urge to roll up the old one and stash it in the garage rafters. Upload a photo and post it to an online garage sale, and let someone in your community take it off your hands.

Landscaping tips to expand your living areaIf you live in a smaller house, look to your yard to stretch out your living space. There are many things you can do with landscaping and hardscaping to make it feel more private while adding a place to relax and entertain. Think of the yard as a place to add a “summer room” and the possibilities really start to emerge!

Get embedded: Small yards can leave you feeling exposed, especially if your front door and window look out on public streets and sidewalks. Add a barrier with a line of hedges, short picket fence or even ornamental trees to create a transitional space that feels private and homey. Bedding perennial plants and flowers can discourage passersby from using your yard as a shortcut.

Patio possibilities: Compared to decks and poured cement, a simple paver patio is less expensive to install. Plus it’s a perfectly doable DIY project, and they’re easy to maintain. Think about adding a hardscaped space for grilling, summer dining and entertaining. Other additions like a brick fire pit (located a safe distance from the house, of course), large potted plants or a pergola will give the space definition and beauty.

Furnish the outdoor “room”: Think about what you’d want to do with the space. Add a large table, and your patio can serve as an extra-large dining space for company. Or cluster some comfy outdoor sofas and chairs and you’ll have an extended living room to relax and enjoy those summer evenings. (Before winter rolls around, here are some tips to get your yard ready.)

Starting your journey as a homeowner is an exciting step. Whether you see your first house as your starting point or a place to establish roots, talk to your local ERIE Agent to make sure you’re covered as you head into this next life stage and beyond.

Many people see a starter home as the beginning of their home-owning journey, check out these tips for making your starter house your (forever) home./blog/living-large-starter-houseErie Insurance